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BAE Systems – Qatar Agrees Contracts For Typhoon Combat Aircraft Purchase By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

The announcement that BAE Systems and the Government of the State of Qatar have today entered into contracts for the purchase by Qatar of 24 Eurofighter Typhoon jets is welcome confirmation that yet another important and very significant Typhoon export deal has been successfully concluded by the UK’s largest defence company. As it has in the majority of Typhoon export campaigns that have so been won to date, BAE Systems will be the prime contractor on the Qatar Typhoon capability programme.

The announcement that BAE Systems has entered into contracts for the purchase by Qatar of 24 Typhoon jets was made in Doha late this afternoon London time at a ceremony in which the UK Secretary of State for Defence, Gavin Williamson and his counterpart, the Qatari Minister of State for Defence Affairs, Khalid Bin Mohammed Al-Attiyah, were in Doha to oversee the signing of a deal that Mr. Williamson later described as being “a massive vote of confidence, supporting thousands of British jobs and injecting billions into our economy”.

The contract with Qatar is clearly excellent news for both BAE Systems and the UK as a whole but it is far more than being just what Mr. Williamson described. Apart from the superb Typhoon capability and through life support that the Qatar Emiri Air Force will receive from BAE Systems, the announcement is of course also excellent news for the German, Italian and Spanish partners in the Eurofighter Typhoon consortium. Important too is that confirmation that BAE Systems has entered into contracts for the sale of 24 aircraft to Qatar as prime contractor and that this newest export order for the aircraft will see the Typhoon programme extended through 2024.

The formal RNS statement from BAE Systems confirms the following:

BAE Systems and the Government of the State of Qatar have entered into a contract, valued at approximately £5bn, for the supply of Typhoon aircraft to the Qatar Emiri Air Force along with a bespoke support and training package.

The contract is subject to financing conditions and receipt by the Company of first payment, which are expected to be fulfilled no later than mid-2018. The contract provides for 24 Typhoon aircraft with delivery expected to commence in late 2022.

BAE Systems is the prime contractor for both the provision of the aircraft and the agreed arrangements for the in-service support and initial training. Charles Woodburn, BAE Systems Chief Executive said: “We are delighted to begin a new chapter in the development of a long-term relationship with the State of Qatar and the Qatar Armed Forces, and we look forward to working alongside our customer as they continue to develop their military capability”.

Contractual confirmation from Doha this afternoon follows a ‘statement of intent’ that was announced on September 17th by then UK Secretary of State for Defence, Sir Michael Fallon and his counterpart in Qatar, Khalid Bin Mohammed Al-Attiyah. It is a credit to all involved including BAE Systems, the Government and State of Qatar and those in the MOD Export Team that this important stage has been reached very quickly. Undoubtedly this is a very interesting beginning for what I regard as being a long term partnership between the two nations and on that basis I suspect that there will be more to come.

Including the four build partner governments, the United Kingdom, Germany, Italy and Spain, Qatar becomes the ninth country to acquire Eurofighter Typhoon capability. In joining Austria, Saudi Arabia, Oman and Kuwait, Qatar also becomes the fourth export customer. Other international Typhoon sales campaigns for which BAE Systems is the lead continue.

Contractual arrangements for the supply of the 24 Typhoon aircraft by BAE Systems to the Qatar Emiri Air Force include a range of bespoke support and training packages. BAE Systems, as the prime contractor, will as part of the agreement, also establish a new Technical training College in Doha that will be focussed on providing students with critical skills required to support the Qatar Armed Forces air platforms in the future.

Coming 18 months since Kuwait ordered 28 Eurofighter Typhoon aircraft, in this case Leonardo was the prime contractor, I take the view that the sale of Typhoon to Qatar is nothing short of being yet another vote of confidence in this superb military aircraft capability. Eurofighter Typhoon remains the most advanced swing-wing combat aircraft capability available anywhere in the world. Importantly and increasingly over the past few years, Typhoon has proven its capability time and again through various international deployments across the full spectrum of air operations that include air defence and air policing, peace support and high intensity conflict.

Importantly and as already mentioned, the Qatar order will stretch Eurofighter Typhoon production out for many years ahead. And with BAE Systems having being prime contractor on the Saudi Arabia and Oman Typhoon awards, the addition of Qatar is to me further confirmation of just how well the company is perceived by customers and particularly of how the company has created an almost unique ability of working alongside its customer in order to develop their specific military capability requirements and in supporting them through life.

Over the years BAE Systems has established a long record of investing in-country particularly in relation to skills development and training support. In Qatar the company intends to continue this also by supporting key STEM based initiatives aimed at inspiring young Qatari students into careers in engineering.

All partners within the Eurofighter Typhoon consortium benefit from each and every Typhoon sold and with an estimated 37% workshare on each aircraft produced, BAE Systems is the major beneficiary. But, as is the case with all military aircraft build programmes, it is the through life support that is equally as important as the original build and having been the most successful in respect of achieving export orders for Typhoon, BAE Systems will be the major long term beneficiary of the programme.

Confirmation that the Government and State of Qatar had entered into contracts to purchase 24 Eurofighter Typhoon aircraft is of course the third such deal by Qatar for western built jets agreed to over the past three years. Earlier this year, Qatar also announced a deal to acquire 36 Boeing F-15 jets and this had itself had followed a 2015 decision to acquire 24 Dassault Rafale fighters.

While acquisition of three different combat aircraft jets may be considered unusual it is certainly not without precedent. In the case of Qatar I believe there is a very sensible element behind this – one that may include a requirement to spread the load and that, given the urgency of overall requirement, there are perceived to be various advantages in respect of capability delivery timing, training and in maintaining strong trading relationships.

Qatar

As part of a wider build-up in air, maritime and land defence capability and with some of the new fast jet military aircraft capability that is planned to come on stream ahead of the 2022 World Cup that the Gulf State is hosting and for which a number of large infrastructure projects are already underway, the new fast jet capability ordered will be used not only to expands the Qatar Emiri Air Force but also to replace the existing fleet of 12 Mirage 2000 jets.

The confirmation announcement of the Typhoon purchase today comes at a time when Qatar continues to face an economic and diplomatic boycott by some other Gulf Region states. They have accused the Doha administration of funding terrorism groups and of cosying up to Iran – a situation that Qatar has strongly denied.

In a statement made by the UK Ambassador to Qatar, Ajay Sharma during the run up to the Qatar National Day celebrations last week and that was reported in the Gulf Times, the Ambassador expressed hope that “2018 will be the year of strengthening British/Qatari relations”. He also emphasised a view that the established partnership between Qatar and the United Kingdom has not changed because of the Gulf crisis and said that “We will continue to develop relations as much as we can because we believe that this is in the common interest of both of us.”

Qatar has a long history of investing in the UK of course but last week it was interesting to see that the UK agreed to invest £4.5 billion (QR 21 billion) in Qatar in order to fund various investment projects. To that end, both nations have agreed to establish a business advisory council to strengthen economic and trade relations.

The UK is Qatar’s ninth largest trading partner and according to Sheikh Ahmed bin Jassim bin Mohamed al-Thani, the Qatari Minister of Economy and Commerce, 79 UK companies with a capital of more than QR8 billion and 672 Qatari-British companies are currently operating in Qatar based engineering, consulting, IT, commerce and services sectors. In addition, 35 UK companies are licensed and fully operational under the umbrella of the Qatar Financial Centre.

As one of the world’s leading exporters of Liquefied Natural Gas (LNG), Qatar’s economy has continued to grow despite the blockade imposed in June by four of its neighbouring Arab states – Saudi Arabia, the United Arab Emirates, Bahrain and Egypt. Importantly the Qatari banking sector which has been another of the Arab states very fast growing areas of activity in recent years has remained very resilient during the blockade.

Suffice to say that although not without some impacts having been felt in tourism and logistics, the general view appears to be that Qatar is and can continue to ‘muddle its way’ through the current blockade. In the process of facing up to the blockade pressure Qatar has also been strengthening its relations with a number of countries including Turkey and Japan. Meanwhile, the IMF continues to forecast growth of 2.5% and 3.1% respectively in Qatar for 2017 and 2018. It may also be worthy of mentioning here that with the potential for LNG production to be increased by 30% in the 2022 to 2024 period, growth in Qatar could be very much higher.

There is a long history of strategic co-operation between Qatar and the United Kingdom and this continues to be very important in areas such as energy and in the investment sector. To that end an estimated 30% of gas consumed in the UK now comes from Qatar and importantly, over 600 UK companies currently operate in Qatar together with other organisations such as those engaged in assisting the fight against terrorism. Providing formidable air defence capability can now be added to the list along with the Royal Air Force working more closely with the Qatari Emiri Air Force on training.

It is also worth noting that last month the Emir of Qatar, Sheikh Tamim bin Hamad Al Thani, announced that in 2019 Qatar intends, for the first time in the Arab emirate’s history, to hold elections for the Shura Council – this being the Consultative Assembly of Qatar.

CHW (London – 10th December 2017)

Howard Wheeldon FRAeS

Wheeldon Strategic Advisory Ltd,

M: +44 7710 779785

Skype: chwheeldon

hwheeldon@wheeldonstrategic.com

@AirSeaRescue

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